By EARL RAY TOMBLIN
CHARLESTON -- At the start of the New Year, when checking out at the grocery store, our seniors, individuals and families will keep more of their hard earned money.
In working with members of the legislature, my proposal to decrease the sales tax on food for home consumption by 1 percent goes into effect. The decline from 3 percent to 2 percent means a savings of $25 million for taxpayers.
For a family of four, that's an extra $52 dollars a year that can be used toward life's other necessities. The food tax is scheduled to drop another percentage point down to 1 percent in July. That is $54 million of food tax relief that goes into place this year.
And, as long as our State's Rainy Day Fund meets certain criteria, the food tax will be eliminated altogether this time next year.
For businesses, the turn of the calendar means more cash flow, inviting the possibility of new investments including employee expansion, thanks to the reduction of two business taxes: corporate net income tax and business franchise tax.
In 2006, I worked with then-Governor Manchin to set up a phase-out schedule for the business franchise tax and a phase-down schedule for the corporate net income tax.
Today as Governor, I am pleased to carry out the plan as we take another step toward a tax structure that will enable businesses to become more competitive and financially secure.
The state's business franchise tax will be reduced January 1st from 0.034 percent down to 0.027 percent and is poised to be eliminated by 2015. That is $15 million in savings to virtually all businesses in West Virginia.
From the time the first reduction was made, until the eventual elimination, taxpayers will have saved an estimated $50 million. When the Business Franchise Tax is eliminated, West Virginia will join the majority of states which currently do not impose such a tax on general business activities.
This is another step toward strengthening our state's attractiveness for business investors and that means jobs.
And the corporate net income tax rate drops from 8.50 percent to 7.75 percent beginning Jan. 1, a savings of another $15 million. The corporate net income tax reduction plan is two years away from reaching the goal of reducing the tax from a high of 9.00 percent in 2006, down to 6.5 percent in 2014.
Corporations are expected to save more than $53 million per year when the rate reductions are fully implemented. The majority of states currently imposing a corporate income tax have tax rates greater than 6.5 percent.
Again, this reduction will improve our attractiveness for business investors.
As more and more West Virginians work toward fiscal responsibility during these challenging economic times, government must lead the way.
From business finances to personal finances, West Virginia is moving forward by enabling taxpayers to save money while continuing to deliver needed services.
We have managed to decrease taxes while saving for the future. We have embraced responsible spending and allowed West Virginians to keep more of their hard-earned money.
I am proud to carry out my campaign promise and I resolve to continue to fulfill that promise, more jobs and lower taxes, as long as I am your Governor.
I wish you and yours a Happy New Year.
Tomblin is West Virginia's governor.